England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM MASTER JAMES IN THE SENIOR COSTS OFFICE

		Rolls Building, 7 Rolls Buildings Fetter Lane, London EC4A 1NL
		10/07/2018

Mr Justice Roth :

Introduction

1. This is an appeal, with permission granted by Marcus Smith J, from the decision of Master James of 25 May 2017 ruling on preliminary issues in a detailed costs assessment, whereby she held that all costs for work done by Fidelity Law Ltd ("Fidelity") for the Appellant, Mr Robinson, were disallowed save for those after 1 May 2015, and all costs for work done by Mr Robinson as a solicitor in his own cause were disallowed. I heard the appeal with the benefit of Master Haworth as an Assessor, although the decision is mine alone.
2. The background to this matter concerns proceedings before the High Court in bankruptcy, commenced by Mr Robinson against EMW Law LLP ("EMWL"). EMWL are a firm of solicitors in which Mr Robinson was previously a partner. Those proceedings were started following a letter to Mr Robinson from EMWL dated 7 October 2014 demanding payment of a little over £85,000 plus interest on the basis that he was in breach of an Individual Voluntary Arrangement entered into with EMWL and other creditors, and threatening bankruptcy proceedings against him. On 17 October 2014, Mr Robinson obtained an interim injunction against EMWL restraining the presentation of a bankruptcy petition. The proceedings were finally settled by a consent order dated 21 May 2015, whereby the interim injunction was made permanent, Mr Robinson was released from the cross-undertakings he gave upon obtaining the interim injunction, and EMWL were ordered to pay 80% of Mr Robinson's costs. It is those costs which are the subject of the assessment.
3. It is not disputed that Fidelity were on the record and acted as solicitors for Mr Robinson in conducting those proceedings, and indeed for the purpose of obtaining the injunction they instructed Counsel who appeared on his behalf. It is also not disputed that Mr Robinson remains in practice as a solicitor and has throughout the relevant time acted as a consultant to Fidelity, and that he did a considerable amount of work, but not all the work, in his own case.

The costs proceedings

4. The costs proceedings below have a singularly unfortunate history. The case was initially placed in the so-called 'block' or 'group' list, intended for simpler costs disputes that would be concluded in less than a day, and came on before Master James on that basis on 6 June 2016. As a result, the costs judge had not had an opportunity to pre-read the papers. When it became evident that the matter could not be concluded that day, the preliminary points concerning the existence of a retainer, the application of the indemnity principle and the right to charge for Mr Robinson's time, were adjourned on the basis that Master James would read through the file to see whether it was clear that there was an agreement between Fidelity and Mr Robinson that they would not charge for his case, and that if she remained unclear as to the position she would direct further evidence and a further hearing.
5. There was then a delay until 2 February 2017, when Master James wrote a very full email to both sides, explaining that she had been through the file and found nothing in writing to suggest that there was ever an agreement that Mr Robinson would not be charged for the work done on his behalf, or that he was working for no fee. She said that she was inclined to the view that it was not contrary to the indemnity principle for Fidelity to charge for the time spent by the partner in the firm, but that she was in some doubt whether the charge set out in the Bill of Costs for Mr Robinson's own time was recoverable prior to a retainer letter of 1 May 2015 (and thus virtually all his time prior to the Consent Order). However, Master James emphasised that this was only a provisional view, and stated:

"I appreciate this letter is couched in somewhat equivocal terms and that is for one very good reason; given the length of time since the previous Hearing, I wish to give the parties the opportunity to make further brief submissions before I finally rule upon these points and move on with the remainder of the Assessment. That can be done in writing, if they wish me to conclude the Assessment on paper, or at the beginning of the further Hearing date if they wish to continue at a live Hearing."

6. The parties understandably did wish to make further submissions, and on 11 May 2017 Master James made an order directing that final written submissions should be filed by 19 May 2017, "in order for the court then to give Judgment on the preliminary issue by 23 May 2017"; and further that in the light of that the adjourned detailed assessment would continue on 25 May.
7. Both parties duly filed written submissions but by error the submissions on behalf of Mr Robinson were not brought to the attention of the costs judge. She proceeded to deliver a reasoned written judgment on 23 May 2017, unaware of the submissions filed for Mr Robinson. As a result, when the hearing resumed on 25 May 2017, Master James recognised that her judgment could not stand and gave both sides the opportunity to make oral submissions. Counsel for both sides then presented oral argument, following which the costs judge gave a short, unreserved judgment. It is accordingly that judgment which is challenged on this appeal, although for EMWL it is submitted that this judgment should be considered in the light of the written judgment issued two days before.

The factual background

8. Mr Robinson instructed Fidelity to act for him following receipt of the letter from EMWL dated 7 October 2014. On 9 October 2014, Mr Richard Brown, the director of Fidelity, emailed Mr Robinson about the case and stated: "… we need to agree a way of funding this work…." However, no specific agreement was then entered into. Only at the start of May, 2015, after the matter had been listed for trial (due to take place in October 2015), did Mr Brown and Mr Robinson turn their minds to the terms of Mr Robinson's engagement of Fidelity.
9. On 1 May 2015, after the parties had held one 'without prejudice' meeting to discuss potential settlement and were considering another, Mr Brown sent an email to Mr Robinson, which included the following:

"In terms of the costs:

a. I think we can say (if there is a meeting) that we have operated to date on my standard ts and cs, of which you are of course aware. However, I attach a draft engagement letter which I think we should finalise. As indicated yesterday, I don't think that we need to make express reference to your time in this, but would be grateful for your thoughts.

b. Obviously, we are only going to provide costs information if they have agreed in principle to make a contribution towards the costs and, even if I had a 'print out', I would not provide this to them.

c. I have spoken briefly to a costs lawyer about the claim for your time. She agreed that, absent the consultancy agreement, these would not be recoverable but, as you are a consultant she would not be embarrassed to claim them – but could not say whether they would be recovered…."

10. Mr Robinson responded, saying:

"I've made some suggestions on the client care letter, as attached. From the date it is obvious that we have done this specially, so we may as well draft it so as to address the points that have been raised. I know we discussed fees and rates, and I thought there was at least one email, but I couldn't find it. Do you have an email or file note? …"

11. No earlier email or file note was discovered, so the position is that the first written agreement was the letter dated 1 May 2015, of which the final form reads in material part as follows:

"Dear Chris

Confirmation of Instructions

EMW

Thank you for instructing Fidelity Law on this matter. I will be dealing with this matter on your behalf. Attached is also a copy of our standard terms and condition which apply to this matter.

Scope of work

Our work will comprise advising you on the terms of the claim by EMW set out in its letter dated 7 October 2014

…

Your commitment to us

You will provide us with full, accurate and timely instructions, in particular so that we can comply with our obligations to you in a cost effective manner. Your commitment to pay our fees and other costs, is set out in the attached terms and conditions.

Our fees for this matter will be based on an hourly rate of £300 per hour plus VAT, and disbursements."

12. Following the Consent Order, the Applicant's Bill of Costs submitted for assessment stated as follows, under the heading "Charging Arrangements":

"The Applicant was a private paying client for this matter and work by his solicitor, the principal of the firm Fidelity Law LLP [sic] Richard Brown, is charged at rates given in a client care letter, the firm being on the record as acting.

The Applicant himself is a practising solicitor who has a consultancy agreement with Fidelity Law LLP pre-dating the commencement of this matter. Accordingly work carried out by him in lieu of work being carried out by his solicitor is charged at the normal rate which the firm would charge clients for his work in accordance with CPR 46.5(6)(ii) and the principles for recovery of costs in such circumstances established in London Scottish Benefit Society -v- Chorley (1884) 13 QBD 872 and subsequently confirmed by later cases."

13. The Bill then charged for disbursements (including Counsel's fees); for timed work prior to the date of the Consent Order amounting to 95 hours 54 minutes by Mr Brown and 110 hours 24 minutes by Mr Robinson, both charged at £300 per hour, discounted to 80% to reflect the terms of the Order; and for timed work following the date of the Order, all of it carried out by Mr Brown, amounting to a further 12 hours 12 minutes. The total profit costs (i.e. excluding disbursements and VAT) claimed were £68,632 up to 1 May 2015, and £9,270 for the period thereafter.
14. EMWL served very extensive Points of Dispute on the Bill, to which extensive Replies were made on behalf of Mr Robinson. For present purposes, what is relevant is that EMWL disputed that there could be any liability in costs as between Mr Robinson and Fidelity prior to the date of the letter of 1 May 2015, and contended that the claim for costs before 1 May 2015 (and thus the great majority of the costs bill) violated the indemnity principle. The Replies to that contention included the following:

"It is correct that the client care letter, which is dated 01.05.15, was produced after the Respondent's email cited above [seeking a copy of the retainer]. The Applicant has never attempted to hide this. However, it was produced at a time when there was no agreement on the part of the Respondent to pay any of the Applicant's costs, which agreement was only reached after an offer from the Respondent on 13.05.15, revising a previous offer of 11.05.15. The client care letter, as is entirely permissible, shows that it covers work in advising the Applicant on the terms of the Respondent's claim in its letter of 07.10.14, which led to the application for an injunction. A client care letter can be sent at any stage of proceedings and can be retrospective. It was prepared at this point simply as a "belt and braces" approach since both the Applicant and the firm knew that the Applicant had always been aware of his liability for costs and the hourly rate for the work but it seemed pragmatic to prepare a formal client care letter since it was plain that the Respondent would argue that there was no retainer, which it has duly done at great length, and would accept no other evidence."

15. The Replies proceeded to acknowledge that Mr Robinson was not a litigant in person, since he was represented by Fidelity throughout, but contended that since he worked as a solicitor on the case the charge for his time could be recovered under the authorities applying the principle in London Scottish Benefit Society v Chorley (1884) 13 QBD 872 ("the Chorley principle").

The decision of the costs judge

16. In the hearing on 25 May 2017 (of which we have been given a transcript), Master James referred several times to having been through the file of the Applicant's solicitors. In her ruling, she stated:

"When I looked at it last time, I was very specifically looking for anything that showed a specific agreement not to pay prior to the written retainer letter and I did not find it but what I have found on and around the date of the retainer letter is, in my view, very strong and contemporaneous evidence to the effect that Mr Christopher Robinson did not – there was no expectation, if I can put it this way, by Mr Robinson or by Mr Brown that Mr Robinson's time would be billed in this matter….

With regards to the specific technical point on implied versus written retainer, there I am going to find in favour of the paying party. If I can put it this way, I am in an element of doubt. It has been presented as a formal written retainer, there is reference in an email to "for the purpose of a meeting we can say that you were acting on my standard terms and conditions, of which you were, of course, aware". But even that is a somewhat elliptical reference. Clearly the client says, "I thought there was a letter, have you found one?" and in the PODs I was referred to that reference to there perhaps being a letter[. B]ut what I am most concerned about in the dates pre:- 1 May 2015 other than the technical point that I think does hold water, that if you advance a written retainer as your retainer, you cannot then fall back on implied retainer, and I think that is the point that the Defendant has taken all along…

On the standard basis, I really think that there is more than enough to this file to put me in a considerable doubt about anything prior to 1 May 2015…."

17. As stated above, the costs judge thus disallowed (a) all costs for work done by Fidelity pre-dating 1 May 2015, and (b) all work done by Mr Robinson in his own cause.

The appeal

18. On behalf of Mr Robinson, Mr Munro submitted that the costs judge had taken a fundamentally wrong approach as a matter of law. The correct position was set out in the leading case of R v Miller, R v Glennie [1983] 1 WLR 1056. Since Fidelity were acting for Mr Robinson as their client, unless Fidelity had agreed with Mr Robinson specifically that he would not be liable for their costs in any circumstances, he remained liable for their costs. Accordingly, it was consistent with the indemnity principle that he should be able to recover in respect of that liability from EMWL.
19. R v Miller concerned a claim by Mr Glennie for the costs of his solicitors in defending him in a criminal trial in which he was acquitted, and for which he had been awarded his costs out of central funds. However, in reality it was understood as between Mr Glennie and his employers that they would pay the bill for his defence. On that basis it was argued that as it was never intended that Mr Glennie would have to pay, he had not incurred a liability for costs. As Lloyd J noted, the point at issue was of wide importance, since the same argument could be raised when a successful party was supported by his trade union or by an insurance company. The court discussed earlier authorities, and in particular the decision of the Court of Appeal in Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495, which was a case where the plaintiff's trade union had retained solicitors to act for him. Lloyd J quoted from the judgment of Bankes LJ in that case, who said at p.501:

"When once it is established that the solicitors were acting for the plaintiff with his knowledge and assent, it seems to me that he became liable to the solicitors for costs, and that liability would not be excluded merely because the union also undertook to pay the costs. It is necessary to go a step further and prove that there was a bargain, either between the union and the solicitors, or between the plaintiff and the solicitors, that under no circumstances was the plaintiff to be liable for costs."

20. After discussing subsequent authorities which relied on the Adams case, Lloyd J held that that there was an initial burden on Mr Glennie to show that the solicitors were acting for him, but that could be discharged by showing that he was the party to the proceedings and the solicitors in question were on the record. The judge continued (at 1061G):

"Once it was shown, as is now conceded, that Mr Glennie was indeed the client, then a presumption arose that he was to be personally liable for the costs. That presumption could, however, be rebutted if it were established that there was an express or implied agreement, binding on the solicitors, that Mr Glennie would not have to pay those costs in any circumstances."

And he added, at 1062E:

"The question is not who was primarily liable for the costs, whether [his employer] or Mr Glennie. The question is whether it was agreed that Mr Glennie should not be liable for those costs under any circumstances. The fact that it was never realistically anticipated that Mr Glennie would pay the costs was a factor to be taken into account in determining whether there was an implied agreement that he would not be liable for the costs in any event. But it was no more than a factor. It was not conclusive."

21. For EMWL, Mr Kapoor sought to distinguish the line of cases culminating in R v Miller on the basis that they applied where there was no written retainer. It was in those circumstances that the presumption arose. However, here, there was an express retainer in the letter of 1 May 2015. Contrary to the initial argument for Mr Robinson below, that retainer was not retrospective. In those circumstances, it was for Mr Robinson as the receiving party to demonstrate that there was an implied retainer going beyond the scope of the written retainer, and there was no place for any presumption. The costs judge found that Mr Robinson had failed to discharge that burden, which was a decision on the facts with which there was no basis to interfere.
22. I cannot accept Mr Kapoor's argument. The use of the word "retainer" in this context is apt to be misleading, and I note that it does not feature in the discussion in R v Miller. There are essentially two questions to be addressed. The first is whether the solicitors whose costs are sought to be recovered were acting for the receiving party as their client. That engagement to act will often be by way of a written letter of retainer, but it need not be. There is no doubt about the answer to that question in the present case: Mr Robinson was a party to the proceedings and Fidelity were on the record as his solicitors from the outset. The fact that there was a written "confirmation of instructions" only on 1 May 2015, well into the proceedings, and that this was not retrospective in the contractual sense, does not affect the answer. The second question is that set out in the Adams case, as reaffirmed in R v Miller: was it agreed with his solicitors that the receiving party would not be liable for their costs in any circumstances? Such an agreement may be express or implied. But unless such an agreement is established, the presumption applies and he is liable for their costs. I think that is hardly surprising: since it is normal that solicitors acting for a client expect to be paid, this is the default position.
23. Master James approached the matter correctly by looking through the file to see if she could find evidence of an agreement as to costs outside the 1 May 2015 letter. However, she then fell into error by asking whether there was an "implied retainer" prior to the "written retainer" of 1 May 2015, and concluding that as she was in doubt on this issue she would find in favour of EMWL as the paying party. Just because Mr Robinson could not positively establish that there was an implied agreement to pay, that does not leave the matter at large so that the court can then give the benefit of the doubt to the paying party. Giving the paying party the benefit of the doubt is the approach when assessing whether particular costs are reasonable and proportionate on the standard basis: see CPR rule 44.3. It has no relevance to the prior and more fundamental question of whether there is any liability at all in costs by the receiving party to his or her own solicitor, and ignores the role of the presumption. That mistaken approach is evident also in the written statement of reasons issued by the costs judge on 23 May 2017 (see at para 19), insofar as they are relevant in the light of her subsequent oral ruling. That was an error of law, which this court can therefore correct.
24. Accordingly, the relevant question is whether it was agreed between Mr Robinson and Fidelity that he would under no circumstances be liable for their costs. Mr Kapoor accepted that there was no express agreement in those terms. Nor can it be, in my view, an implied term of the agreement as set out in the letter of 1 May 2015. Mr Kapoor submitted that it was inconsistent with the terms of that letter that Mr Robinson should be liable for the costs before that date, and the parties must have intended the contrary. But in my judgment, there is no such inconsistency. Just because the parties sought to set out an agreed position on fees on 1 May 2015 in terms which, when properly construed, are not retrospective, does not mean that they had agreed that there should be no liability for costs incurred prior to that date. It may well be that, in the rush to get an injunction and given the close working relation between them, Mr Robinson and Mr Brown of Fidelity has simply not properly considered the question, beyond a passing reference to the need to consider funding. That manifestly does not give rise to an agreement that Mr Robinson would not be liable for any fees. This is accordingly a classic case for application of the presumption.
25. Mr Munro sought to argue that Mr Robinson is therefore entitled to all the costs in Fidelity's bill (subject to assessment as to the rates). However, that ignores the finding of fact which the costs judge made on the basis of her review of the file. She expressly found that there was evidence on the file of an understanding that Fidelity would not charge for Mr Robinson's time. That also is unsurprising. It would be strange for Mr Robinson to expect to be liable to pay his solicitors for the work he did himself. In any event, this was a finding of fact by the costs judge, which is not challenged in Mr Robinson's Amended Grounds of Appeal. Nor could such a challenge be entertained without consideration of the file that was before Master James but which has not been produced to us.
26. Mr Kapoor sought to argue that since Mr Robinson's case was first put forward on the basis that the written retainer was retrospective, he was estopped from arguing the case on a different basis. But this is not a question of estoppel: Mr Robinson's position in the Replies to the Points of Dispute on the bill was that he had throughout understood that he was liable for Fidelity's costs, irrespective of the letter of 1 May 2015 which was described as a "belt and braces" approach. The underlying facts relied on have not changed, and there is nothing to prevent Mr Robinson advancing his case on the basis of the correct legal test.
27. Accordingly, once the right question is asked, namely whether it is established that there was an agreement that Mr Robinson would not be liable for Fidelity's costs in any circumstances, the answer is clear on the factual findings of the costs judge. She did find an implied agreement that Fidelity would not charge for Mr Robinsons' own time, but nothing further. The presumption accordingly applies, and Mr Robinson is liable for all other costs of Fidelity. Specifically, that includes the costs of Mr Brown.
28. Since Mr Robinson's costs therefore could not be encompassed within his liability to Fidelity, Mr Munro sought in the alternative to recover those costs on the basis of the Chorley principle. He submitted that although not acting as a litigant in person, Mr Robinson is entitled to recover his costs as a practising solicitor doing work in his own case.
29. Chorley concerned an action brought against a firm of solicitors who defended in person and were ultimately successful and awarded their costs. The question arose whether the solicitors were entitled to recover the costs of their time, which an ordinary litigant in person could not recover. The Court of Appeal held that they were, albeit that the costs of a solicitor appearing in person would be assessed differently from the costs of a litigant appearing by a solicitor since the former could not recover costs for that which did not exist, e.g. the costs of consulting himself or attending upon himself. Brett MR expressed the position as follows, at 875:

"I should have thought that a person wrongfully brought into litigation ought to be indemnified against the expenses to which he is unjustly put; but there cannot be a perfect indemnity, because it is impossible to determine how much of the costs is incurred through his own over-anxiety. When an ordinary party to a suit appears for himself, he is not indemnified for loss of time; but when he appears by a solicitor, he is entitled to recover for the time expended by the solicitor in the conduct of the suit. When an ordinary litigant appears in person, he is paid only for costs out of pocket. He cannot himself take every step, and very often employs a solicitor to assist him: the remuneration to the solicitor is money paid out of pocket. He has to pay the fees of the court, that is money paid out of pocket; but for loss of time the law will not indemnify him. When, however, we come to the case of a solicitor, the question must be viewed from a different aspect. There are things which a solicitor can do for himself, but also he can employ another solicitor to do them for him; and it would be unadvisable to lay down that he shall not be entitled to ordinary costs if he appears in person, because in that case he would always employ another solicitor."

Bowen LJ, agreeing with the Master of the Rolls, said at 877:

"… the costs claimed, subject to the exceptions which have been mentioned, ought to be allowed, because there is expenditure of professional skill and labour."

And in a brief, concurring judgment, Fry LJ stated at 877-78:

"I think that the conclusion at which we arrived will be beneficial to the public, because if the rule were otherwise a solicitor who is party to an action would always employ another solicitor, and whenever he is successful he would recover full costs; whereas under the rule of practice laid down by us, a solicitor who sues or defends in person will be entitled, if he is successful, to full costs, subject to certain deductions, of which his unsuccessful opponent will get the benefit" [i.e. the costs of taking instructions from, and attendances upon, himself].

30. The Chorley principle has been considered much more recently by the Court of Appeal. In Malkinson v Trim [2002] EWCA Civ 1273, it was held that the principle applies equally where the solicitor defendant is a partner in a firm and the work is carried out not by him but by one or more of the other partners, or by employees of the firm. The Court held that there could be no rational basis for making such a distinction, and that the reasoning of Chorley applies equally to allow recovery in such a case. Chadwick LJ (with whose judgment Potter and Wall LJJ agreed), conducted a careful analysis of Chorley, noting at [11] that the principle enabled solicitor litigant "to recover, as costs, compensation for his own time and trouble." He conluded, at [24]:

"A partner who is represented in legal proceedings by his firm incurs no liability to the firm; but he suffers loss for which under the indemnity principle he ought to be compensated, because the firm of which he is a member expends time and resources which would otherwise be devoted to other clients."

31. Halborg v EMW Law LLP [2017] EWCA Civ 793 concerned the specific issue of whether the same approach applied to a Limited Liability Partnership (by coincidence the same defendant as in the present case) in the light of the wording of CPR rule 46.5, which concerns litigants in person. The Court of Appeal held that it did. Moreover, in the course of his judgment (with which Beatson and Underhill LJJ agreed), Sir Terence Etherton MR made clear (at [40]) that the Chorley principle is explicable on pragmatic grounds and cannot be dismissed as an anachronism. The Master of the Rolls summarised the principle as follows, at [19]:

"The common law principle established by the Chorley case ("the Chorley principle") may be summarised as being that: (1) a solicitor who acts for himself as a party to litigation can recover not only his out of pocket expenses but also his profit costs, but he cannot recover for anything which his acting in person has made unnecessary; (2) the reason is not because of some special privilege but on the purely pragmatic grounds that (a) there has actually been an expenditure of professional skill and labour by the solicitor party, (b) that expenditure is measurable, (c) the solicitor party would otherwise employ another solicitor and, if successful, would be entitled to recover the costs of that other solicitor, and (d) since he cannot recover for anything which his acting in person has made unnecessary, the unsuccessful party will have the benefit of that disallowance and so would pay less than if the solicitor party had instructed another solicitor."

32. The present case is of course different in that Mr Robinson was neither acting in person nor was a partner or member of Fidelity: he had a consultancy agreement with Fidelity. Does the same principle therefore apply to him? It seems to me that the rationale of the principle should apply equally where a solicitor in practice instructs another firm to act for him, but relieves that firm from part of the work required in his case by doing it himself. All the criteria which justify the Chorley principle, as conveniently summarised in Halborg, apply in such a case, and it is self-evident that if Mr Robinson had not carried out the work himself he would have required Fidelity to do it for him.
33. Moreover, an analogy can be found in the decision of Teare J in Shackleton and Associates Ltd v Shamsi [2017] EWHC 304 (Comm), [2017] 2 Costs LO 169, on which Mr Munro strongly relied. The relevant issue in that case was explained by the judge at [37]:

"The claimant is a company. Its sole business is, I am told, to provide the services or Mr Shackleton as counsel or arbitrator in international arbitration. He is a solicitor advocate. The claimant earns fees from its clients for so doing. In this case the claimant has claimed its fees from the defendants in an ICC arbitration and has obtained an arbitration award in its favour. In this jurisdiction the claimant has sought to enforce the arbitration award and has faced resistance from the defendants. In the course of overcoming that resistance the claimant has incurred legal costs by instructing two firms of solicitors and counsel to represent it. Mr Shackleton has also worked on the proceedings in this jurisdiction but is not paid for his work by the claimant because, as he puts it, he benefits in any event as its sole shareholder. He has said that there would be no sense in requiring the claimant to employ outside solicitors to enable it to recover the cost of work which he can undertake more efficiently and that the arrangement between the claimant and himself and the outside solicitors is an economical and appropriate way to divide the work required for the conduct of this litigation. The claimant therefore seeks an order that the claimant can recover as part of its costs compensation for the time spent by Mr Shackleton on this case notwithstanding that the claimant has no liability to pay such compensation to Mr Shackleton. The defendants resist such an order. They say that it breaches the indemnity principle pursuant to which a successful party cannot recover more than it is liable to pay."

34. After considering both Chorley and Malkinson v Trim, Teare J observed, at [45]:

"It is to be noted from these two cases that the indemnity principle does not require the litigant to be under a liability to pay for the legal services which have been bestowed upon him. It is sufficient if he suffers a loss. If he does so there is no breach of the indemnity principle because an award of costs indemnifies the litigant in respect of that loss. Moreover, "loss" for this purpose can be broadly defined. In Malkinson v Trim loss was established because the firm of which the solicitor litigant was a member expended time and resources on his case which would otherwise have been devoted to other clients."

35. A complicating factor in Shackleton was the fact that the claimant seeking its costs was a company and not Mr Shackleton himself. However, Teare J held that this should not affect the result. He stated, at [52]:

"The claimant has suffered a loss because as a result of Mr Shackleton spending his time on the claimant's pursuit of its fees the claimant cannot use his services to earn fees for the claimant in other cases. There is no doubt that at least some of the services performed by Mr Shackleton were not duplicated by the solicitor and counsel instructed by the Claimant. For example he appeared as counsel before Flaux J and he prepared the skeleton argument for this application. If the claimant had instructed a solicitor and counsel to do that work there is no doubt that it would recover the costs of so doing. It would be odd if by using Mr Shackleton to do that work the claimant could recover nothing in respect of his work. That suggests that a just result would be one which enabled the claimant to recover a reasonable and fair amount of his time."

36. The judge proceeded to conclude that the claimant can recover a reasonable and fair amount in respect of Mr Shackleton's services. He stated, at [53]:

"I do not consider that such a conclusion breaches the indemnity principle because a broad understanding of "loss" is appropriate in this field. Further, to disallow his time would risk pushing "abstract principle" to a point where the result was not consistent with justice."

37. Mr Kapoor contended that Mr Robinson was trying to have it both ways: on the one hand he sought to be treated as an employee of Fidelity, and Fidelity's Bill of Costs included a charge for him, whereas on the other hand he sought payment for his time as an independent practitioner. He stressed that Mr Robinson had only a consultancy agreement with Fidelity and had no expectation of being paid consultancy fees for work on this case. And he pointed out that if Mr Robinson's claim was for loss on the basis that he could have done other work, as explained in Shackleton at [45], there was no evidence at all that Mr Robinson would otherwise have spent the time he devoted to his own case instead on consultancy work.
38. However, this was not a new point raised on the appeal. There was express reliance on Chorley as the basis of recovery in the Bill of Costs, and this was developed further in the extensive Replies to the Points of Dispute. Mr Robinson never sought to present himself as anything other than a consultant. The costs judge recognised in her email of 2 February 2017 that an argument was being advanced based on the Chorley principle. Moreover, Mr Munro had cited and relied on Shackleton in the subsequent oral argument before the costs judge, albeit that this point is not discussed in her brief ruling. It appears that having held that there was no implied retainer prior to 1 May 2015, she considered that was the end of the matter.
39. Although it can be expressed in terms of loss, I do not think it is analogous to a claim for compensatory loss and damage. As the summary in Halborg and the reasoning of the earlier cases make clear, it is a claim for expenditure in terms of measurable skill and labour, which the solicitor is entitled to recover on the basis that it avoided his having to pay another solicitor to do the work. There is no suggestion in Shackleton that the court required evidence that the company had to turn away work or that Mr Shackleton would otherwise have been engaged on work for other clients. Similarly, in Malkinson v Trim it was not a condition of the right to recover that the solicitors could demonstrate that they had sufficient work for other clients on which the relevant members of the firm would have been engaged if they had not been acting for the defendant. That case also shows that the principle is not restricted to the situation where the solicitor is acting in person.
40. Accordingly, I consider that Mr Robinson is entitled to recover costs for his own time spent as a solicitor on his case. The rate for assessment is not the rate which Fidelity would charge out specifically for Mr Robinson's services, or the net amount that Mr Robinson would receive in such an event pursuant to the consultancy agreement. He was not here acting under that agreement, which I therefore regard as irrelevant. The rate is to be assessed as the reasonable rate for the litigation services which were carried out by Mr Robinson instead of being carried out by Fidelity. I note that at the earlier hearing on 6 June 2016, the costs judge assessed a reasonable rate for Mr Robinson at £200 an hour. But because of the view she reached as to the irrecoverability of costs for his work, she does not appear to have gone through the exercise of considering the various items of work he carried out in the Bill to ascertain whether any of them were reasonable and/or necessary, including whether they could reasonably have been carried out by a lower grade of fee earner.
41. In principle, that assessment might now have to be carried out if the parties cannot agree on an overall figure for the fees for his work. In practice, the costs of such an exercise seem to me wholly disproportionate to the difference involved and I would hope that, in view of all the costs already incurred in this dispute about costs, the parties can reach a sensible agreement. I shall accordingly hear the parties as to the appropriate order to be made in the light of this judgment.